Many FMCG companies and Brands promote products inside retail shops by supplying assets like Refrigerators, Mini Refrigerator, ViziCoolers, lighted asset, digital signage, kiosks and so on. It’s a usual sight to find a Cokacola refrigerator, Cadbury’s Vizicooler, Ponds lighted asset at a local kirana shop.
The primary purpose of supplying these assets is to gain a brand presence in Retail shop, right in front of customer and maintaining product quality by ensuring that product reaches consumer in right state so that consumer experience is of utmost quality.
The Cost Structure
The cost of asset can range from INR 5,000 to 30,000. A typical large refrigerator cost about 10-12K each and a ViziCooler costs about 4-5K each. However, the scale of proliferation increases investment significantly. Estimated number is 100K assets are distributed in a Tier 1 city alone. Above all, FMCG companies and Brands also make monthly payments to retailer to maintain the asset, pay electricity bill generated by the asset etc. The payout can range from INR 200 to 1000 for each retailer, depending on which asset is given and how many of them are given. Such a large investment on ground requires monitoring, however, at present assets are monitored by field officers (FOs) visiting retail stores.
One can realize the estimated one time investment and recurring costs by simply multiplying above numbers.
Why do assets need monitoring?
Isn’t that a valid question? Well, there are few reasons that require monitoring of this large investment
- Asset Relocation / Theft
Usually light weight assets are prone to theft. Either they are moved from planned retail outlet to any unintended place or sold out. In such cases, it is important to monitor the place of the asset and disproportionate movement / acceleration on the equipment.
- Ensuring product quality
At times, Retailer may decide to switch OFF the asset believing that outside temperature is cold enough. However, this may impact product quality e.g. chocolate texture may deteriorate and consumer experience may get impacted.
- Asset misuse
FMCG company may experience decline in demand from a retail outlet, however, Refrigerator could be still used for keeping other products.
- Usage pattern
Usually different retailer will have different asset utilization base on time of day, month of year, festive time etc. Utilization pattern will differ from city to city and state to state. Monitoring usage pattern can reveal hidden information about the geography and retailer behavior.
- Asset Deployment Conditions
It could be possible, that the assets are installed in sub optimal environment that might degraded the performance of the assets or expose assets to suboptimal conditions where assets can fail.
Although, there is a need to monitor assets in retail, companies find it difficult to monitor these equipment.
- Large deployment base
Companies have large deployment base, reaching out to each and every asset is a humongous task. Time and cost to deploy becomes critical as numbers get multiplied by the base.
- Limited monitoring budget
Since price of the asset itself is low, per unit budget for monitoring assets over year is lowered further. Thus it may be difficult to cover cost of technology, cost of deployment, cost of data (if applicable) etc.
- Asset warranty
Installing an IoT product may require opening the asset, which may result in violating the warranty of the asset received from OEM.
- Retailer non-cooperation
Installation of any monitoring mechanism at Retailer will require field engineer to spend time inside Retailer outlet. Based on busy hour of the day, Retailer may not want fiend engineers to operate inside Retail outlet.
Are there any solutions to above challenges? The answer is Yes and No (at present). The above issues can be categorized into Technical and Non Technical issues. Technical issues can be overcome by applying appropriate technology, whereas non technical issues need soft powers to navigate.
Issues like limited monitoring budget and asset warranty, can be overcome by innovative IoT companies, those who can build a Technology that is cost effective, at the same time ensures that warranty of the equipment is kept intact. Large scale presence of FMCG and Brands can create large opportunity for IoT companies.
Issues such as non-cooperation of retailers can be overcome by Team work, where Brand can associate its representative while installation or initiating a call to retailer and educating / informing retailer about the initiative taken by company.
No doubt, saying is easier than done! But these challenges is what opens door for innovation and startups who can solve these big issues.
Amol Vedak is a co-founder / Director of EasyReach Solutions Pvt. Ltd., company that operates in the area of IoT for FMCG and works with large FMCG customers. Amol is an MBA from Nottingham University and has spent 19 years in Telecom and Software. He has been part of multiple successful startups in the past.